Thursday, December 01, 2005

Enoc (Emirates National Oil Company?) seeks to permission to be allowed to raise price or be subsidized:

Dubai: Enoc engineer Hussain Sultan said that the loss Enoc suffers from the sale of each gallon of petrol should not be allowed to continue in 2006.. . .despite the rise of gasoline prices by 33 per cent in the last six months, the company continues to lose revenue in its retail sales. Eliminating these losses can be done through one of two solutions, argued Sultan. Either the Dubai government could subsidise fuel as is done elsewhere in the GCC or, alternatively, the company should be allowed to let prices reach natural levels according to free-market forces.

Waivers sought

Sultan argued that since Enoc is a commercial organisation, and operated as a profit-making company, it should be freed from any artificial constraints.. . .Tayyeb Al Mula, Chief Executive of Enoc, said: "We import approximately 1.5 million tons of oil annually from Saudi Aramco with a value of $400-$500 million per year. He pointed out that the extension of Enoc's existing refinery to a capacity of 120,000 barrels a day would cover the company's needs for two years and reduce Enoc's reliance on imported oil.

Two questions:

1. Why is Enoc importing oil from Aramco when the UAE exports oil to the rest of the world?

2. If Enoc gets a waiver to raise price does it expect that consumers will purchase its gas when they can find a lower price around the corner? Or do they do the plan to raise price only in those areas where there is no rival around the corner? Or do they expect other retail outlets to follow its price increase?